BW: Jeff Bezos on Amazon's Tech Edge

The e-tailer's CEO says the site is unique "only because we've hired some of the most talented computer scientists in the world"

Amazon.com Chief Executive Jeffrey P. Bezos is riding high again after several years struggling to survive amid the dot-com crash. Amazon still hasn't earned an annual profit, but its losses are rapidly narrowing as aggressive price-cutting has recharged sales growth in the past year (see BW Online, 8/7/03, "Amazon's Search for a River of Growth"). As one of the pioneers to commercialize the Web, Bezos has a unique view into the process of technology innovation, a process he believes hasn't slowed down. Here are edited excerpts of a recent conversation he had with BusinessWeek Silicon Valley Bureau Chief Robert D. Hof.

Q: At what stage is the Internet as a technology?
A: It's like the early days of electrical appliances. The Internet and the things that will come out of it are around the level of the 1908 Hurley washing machine. The electric outlet hadn't been invented yet. Nor had the on-off switch.

Q: What new technology most excites you these days?
A: One thing is all the stuff going on in the unlicensed spectrum, the most famous being Wi-Fi [wireless high-speed Internet access]. You'll be able to be wirelessly connected the whole time. Anything that lets people be connected more easily to the Internet is great for us.

Q: What about space travel? You have bankrolled a space startup.
A: I'm funding a very early-stage space-research company called Blue Origin. We want to try to make it safer and lower-cost for people to go into space. We will be but a small part of a big, challenging, hard technical effort.

Q: Can Amazon keep getting an edge from technology?
A: By building new technologies ourselves, we get to offer a better customer experience. Does that give us an advantage? Absolutely. Now, if we just rest on our laurels, we're not going to enjoy that advantage. You have to continue to innovate.

Q: Has technology itself ever been most of the competitive differentiator for companies?
A: I can't speak for other companies. For us, it is. What gets us up in the morning and keeps us here late at night is technology. Our focus is on hiring the best and brightest software engineers and computer scientists in the world. That's what differentiates our customer experience. What we're doing really is new. And if we followed that second rule -- follow and don't lead -- we would be in serious trouble very quickly.

Q: But even though Amazon.com creates technology, its main product is a shopping service. So is your company's experience really much different from any other consumer-oriented outfit?
A: The three most important things in retail are location, location, location. The three most important things for our consumer business are technology, technology, technology. That's what takes the place of real estate in our business.

When we can improve our personalization algorithms so that we show something to somebody that they wouldn't have discovered in any other way, and then that product serves them very well, that's something that's incredibly valuable. And I can assure you that that's available on our Web site only because we've hired some of the most talented computer scientists in the world.

Q: So, you're saying that Amazon.com, at least, does get competitive advantage from use of technology, which is what some say can't be done anymore.
A: At a certain point, as old technologies do become well-understood and widely disseminated, they do become baseline technologies that no longer provide anyone a competitive advantage. Instead, those old technologies are just part of the cost to play.

But throughout hundreds of years, there have always been new technologies that came along. If you're talking about new technologies, you can get competitive advantage. By building new technologies ourselves, we get to offer a better customer experience for millions of people. Does that give us an advantage? Absolutely. [But] you have to continue to innovate. This is something that has to be refreshed every day, every week, every year.